In an effort to solidify Wal-Mart's position in the
market, a strategic marketing study had been requested by the head of
Sales and marketing. As sales in existing stores slowed, an
attempt had been made to increase revenues at existing stores by
product diversification in order to attract more affluent and
brand-conscious consumers. According to the finance department,
however, it seems that analyst estimations will not be met, thus
threatening WM's ability to offer value to its shareholders. In
addition, a change in the external environment in the form of a
down-turn in the economy had made it necessary to construct an
appropriate and well-thought-out strategy for the years
2009-2010. Based upon departmental research, it has been found
that WM's core consumer base shops for basic goods such as food based
on low prices. Wal-Mart has always based its core mission on the
attempt to improve consumer lifestyle by offering the lowest prices so
that consumers can use the money elsewhere. Wal-Mart's situation
is that its previous growth has been based upon the construction of new
stores. There comes a time, however, when the marginal utility of
adding new stores is no longer useful. There are several
strategic alternatives but, based on the following research report, it
has been recommended that Wal-Mart use a market-development strategy in
attempt to attract new customers to its present product selection with
a focus on its “power” product categories (food,
entertainment, apparel, home goods, pharmacy.) A 25%
increase in advertising expenditures is recommended in order to expand
product awareness. Specifically, television commercials are to be
used as the primary medium of delivery as the advertisements are
stimulating and reach a large audience. In addition to brand
awareness, television advertising can be used as a means of improving
Wal-Mart's public image.

The purpose of this report is to critically analyze
Wal-Mart's current situation and to plan a future strategy which will
be most likely to give it a competitive advantage. Profits are a
function between the relationship of revenues and cost.
(profit=revenues-cost) The higher the profit, the more value the
company can give to its shareholders, which is the primary function of
the company. In order to increase revenues, consumer needs must
be understood so that a company can make a product which will satisfy
those needs. Having a product which does this is not enough,
however. Consumers must be aware of the product. High
revenues alone do not ensure profits. Companies must be able to
create and deliver products in a way which minimizes costs to the
company. Ultimately, the company able to offer the most valuable
product at the lowest cost to the company will have the greatest
profits. In order to achieve these two goals, a company must
strategically plan its future actions. Within this report,
Wal-Mart 's current situation will be analyzed and a strategic
marketing program will be created for the 2009-2010 year.

Wal Mart's goal is to;save people money so they can live better.(Wal-Mart, purpose, 2008)
Sam Walton stated: If we work together, we'll lower the
cost of living for everyone...we'll give the world an
opportunity to see what it's like to save and have a better
life. Knowing that price is important to its customers, Wal Mart
offers the highest quality products at the lowest prices. By
saving money on necessary products, people will have more money to
spend on other things.

Wal-Mart is guided by three basic beliefs and values
(Wal-Mart, 3 values, 2008) The first is respect for the
individual. Respecting the diversity, employees are encouraged
to express their thoughts and ideas as long as they are treated with
respect. The second is service to customers.
Customers keep Wal-Mart in business and thus they should be treated
well. Wal-Mart strives to excel in customer service by training
employees to politely engage any customer within ten feet. The third
value is striving for excellence. Wal-Mart can be
proud of its accomplishments but never satisfied.

The credit crisis has caused a change in the state
of the economy. Consumers have less disposable income to spend on
non-critical items and the situation could get worse if there is a
recession. Even with 10-30% price cuts, Wal-Mart has found that
shoppers still spend mostly on cheaper grocery and pharmacy items.
Reasons include higher energy costs, higher food cost, slow job growth
and declines in the credit and housing markets. (3) Wal-Mart has the
opportunity to strengthen its image as being the low-cost
supplier through the use of its economies of scale. The threat is
that changing its wage and health care structure, in response to
criticism, will increase costs which must then be passed on to the
consumer. As new store growth in the US slows, Wal-Mart's management
has suggested that much of the company's future growth would
come from its international operations. (Gogoi, 2007) The
opportunity for expansion is good but the threat comes from the unknown
and changing political and social environments in other countries. In
terms of social and cultural environment, firms are expected to offer
men and women equal wages for equal work, wages which will allow a
decent standard of living for its employees, and decent health
care. Wal-Mart's size and availability of cash allows it to run
television ads in its favor in order to take its arguments
straight to the public in an ongoing battle over its reputation with
unions and other critics. Wal-Mart must be careful to back up
its ads with concrete efforts as critics reply : no matter how
bad their public reputation is, they still believe that a tired ad
campaign can fool the American public into believing it is OK to
exploit millions of working families. (2)

Wal-Mart operates within the Discount/Varietystores
industry. Its major competitors include Target Corporation with
annual sales of $63 billion, a market cap of $43.9 billion and CostCo
Wholesale Corporation with annual sales of $68 billion and a market cap
of $30.76 billion. (Yahoo 2008) The threat of new entrants is low
as the cost of entry is high. Substitute products can be found but not
at such low prices due to economy of scale. Suppliers have little
bargaining power as they desire to have a large customer like WM.
Buyers have a large impact on the industry as they demand that
suppliers offer products at the lowest price possible.

Wal-Mart's objectives are to increase shareholder
value by increasing profits through the increase of revenues and
decrease of costs. Its organizational strengths consist of its
economy of scale and dedication to mission and its weakness consists of
public criticism concerning some of its business practices.
Profits keep rising but not as fast as Wall Street
expects. This, in part, could be caused by the fact that
Wal-Mart has yet to attract more affluent shoppers. It has beat
analysts' profit expectations with an increase of net income of 9.8% to
$3.94 billion and its sales increased 10.9% to 98.09 billion, but this
was lower than the $99.95 billion forecast by analysts. (Gogoi,2007)

Retail experts say nearly half of American
families shop at Wal-Mart at least once a week.
(1)A competitive advantage is established if
the customer comes to associate WM with superior products and service.
Research should be conducted to see which products should
be introduced and which should be withdrawn. In the recent
past, WM began to offer higher end goods in an attempt to attract
different customers but found that most of their customers come
only for cheap groceries and steer clear of the other
merchandise. (1) WM also offers price cuts ranging between 10
and 30 percent just before important events like the SuperBowl football
championship game in 2008 in an attempt to increase sales. (3) Wal-Mart
has also decided to broaden its approach by offering certain products
online. For example, its Canopy home furnishings brand (4)

As Wal-Mart has found the hard way, customers
primarily shop at its stores in order to utilize the low prices as
opposed to higher-end goods. Considering the current
environmental state of the economy, it is recommended that Wal-Mart
pursue a market development strategy in order to attract new customers
to its already popular products.

It is recommended that Wal-Mart not segment to one
particular market segment but rather to the following three:
Brand aspirational - low-income individuals obsessed with having well
known brands, price sensitive affluents -wealthier but still
enjoy finding a good deal, and value-priced shoppers -low income
holders with no other choice but to buy from the lowest price provider.

Wal-Mart's “power” product categories
consist of food, entertainment, apparel, home goods, and
pharmaceuticals. Considering the state of the economy,it is recommended
that Wal-Mart maintain its current product focus. In order to increase
value, WM should focus on intangible aspects of product such as
superior customer service.Wal-Mart can ensure low prices through
its economy of scale. Being such a large company gives it more power
over suppliers since it forms such a large percentage of
supplier-business. WM can further increase revenues by enlarging the
width of its product mix as opposed to depth. Packaging of
products should not take great precedence yet should look neat.
Remember that increasing profits means decreasing costs.

Part of selling products is creating awareness. WM should increase awareness through
advertising more often and through a variety of effective
mediums. WM should increase its advertising during times in which
customers are likely to be planning their shopping. Sales promotions
should be used during special events where customers will be
shopping anyway. For example, before Thanksgiving WM can offer a
special on Turkeys, knowing that customers who shop for a Turkey are
likely to buy mashed potatoes as well. Though expensive,
television advertising appeals to the senses and is able to reach a
mass audience.

In order to decrease costs, WM should focus on the
direct channel method of distribution. By cutting out
intermediaries, WM will decrease its total distribution cost and thus
be able to offer the lowest prices while making the largest
profit. This arrangement also gives WM the highest degree of
control as it decreases the power of buyers.

Price should be set low enough so that customers
purchase goods from WM instead of, say, Target; however, price should
be set just under this amount to ensue healthy profits. For
non-perishable goods, price should not be set so low as to give
consumers the impression that the product is of poor quality.
This, in part, is why it is also important to carry brands which
customers perceive as being of high quality. WM should also take
advantage of every-day low pricing strategies in order to cut back on
advertising costs.Customers should come to associate WM as
always offering the lowest prices as opposed to a high/low provider.
This method also cuts down on inventory management costs, as inventory
levels are more easily predicted. In reaction to competition, of
course, WM should be ready to change its prices as needed.